As interest-only loans approach their expiry Westpac is offering a $2,000 rebate to new customers refinancing with them.
Westpac and its subsidiaries will offer the $2,000 rebate for anyone refinancing with a loan amount of over $250,000. It is also offering a $1,000 purchase rebate for every property bought with a loan amount of over $250,000.
Around 45% of the Westpac loan book last year was made up of interest-only loans, followed by Commonwealth Bank which had around 40%.
According to a recent analysis by investment bank Morgan Stanley, IO lending is expected to fall from around 40% of the big four’s total loan book in 2017 to around 20% by next year. This year around 25% of major lenders’ IO loans are set to expire.
Meanwhile, lenders are cutting home loan rates offered to property investors in a bid to kick-start the sector after over-reaction to regulatory pressure caused sales to decrease.
Many lenders are also making the most of lower funding costs to make big cuts in three to five-year fixed rates, which are popular with investors attempting to budget long-term.